Planning my retirement

Retirement: a new life
Retirement is not what it used to be in our parents’ time. Today, you can stop working before age 60 or 65, or retire gradually to fulfill a dream or start new projects. Regardless of your situation, your goals and your needs, anything is possible as long as you’re well prepared. What’s your dream scenario?

Imagine the future now
Life expectancy is increasing in Canada, as is the retirement period, which can be 30 years or longer, as the case may be. At what age will you retire? What will you do: live abroad, travel, continue to work part time? Will you have enough money to maintain your lifestyle? How will your family be impacted? Have you considered the tax aspects? These are just some of the points to consider when planning for this important stage of your life.

Your vision, your finances
Generally, to maintain the same lifestyle in retirement, you will need the equivalent of at least 70% of your average gross annual income during your last three years of work. However, to determine how much you will need to replace your gross income, you must first estimate your retirement expenses. Some will decrease, others increase.

It is therefore important that you think about your future retirement and that you establish at least one expenditure budget scenario. Sometimes it’s easier if you separate your fixed expenditures (electricity, heating, taxes) from your variable expenditures.

To get clear picture
When your scenario is established, your Advisor can prepare a retirement income projection taking all factors into account:

• Returns
• Assets
• Liabilities
• Inflation
• Risk tolerance
• Taxes
• Decumulation
• QPP and OAS
• Insurance, etc.

This will give you a very clear picture of your situation and any adjustments that have to be made.

The primary sources of retirement income are:

Public plans
Provide a part of necessary income. Taxable benefits, amounts vary according to civil status and family income.

• Québec Pension Plan (QPP)
• Old Age Security (OAS) pension from the federal government

Private pension plans
Supplement public plans, for example:

• Supplemental pension plan (SPP)
  – Defined contribution plan
  – Defined benefit plan
• Other plans

Personal savings and investments
Primary or supplemental income from other sources.

• Amounts from registered or non-registered investment accounts: TFSA, RRSP, RRIF, IPP, etc.

To achieve the lifestyle of your dreams, and enjoy peace of mind, you need strategies tailored to your retirement scenarios. Don’t hesitate to consult our experts for advice.

Take action!
Do you have realistic goals? Our specialists can help you determine the savings capacity required to achieve the lifestyle you want and to carry out your projects. You’ll need a personalized action plan to assess the feasibility of retirement (projection), and you may have to consider alternative scenarios, such as:

• raising your retirement age
• lowering your retirement income level
• saving more
• selling assets

Maximize your income
Once your financial planner has helped you assess your budget and given you a better idea of your sources of retirement income, you need a good strategy to maximize your income for retirement, while reducing the tax impact. A good habit is to review your investment portfolio with this in mind.

Planning your exit
Avoid nasty tax surprises by planning the withdrawals from your investment accounts. Here are some attractive options to consider as part of your retirement income strategy:

• Pension income splitting with your spouse, if your eligible retirement income is higher than your spouse’s.
• Sound allocation of your assets between registered and non-registered investments. Know that dividend income, interest income, capital gains and other income are all taxed differently. You could lose substantial tax credits if you don’t hold the right types of investments in the appropriate plans.
• Effective use of your TFSA.
• Transfer of your RRSP to a RRIF or to a life annuity.

Make your life easier!
Tax rules change, as do your needs. To prolong and optimize the total decumulation of your assets, you need the advice of qualified experts. Don’t hesitate to discuss this with them.

For the future
There are other important aspects to consider when you retire: protecting your wealth and preparing for its transfer. You want to make sure that your decisions are respected and that your heirs are not penalized. Key steps to take include:

1. Estate planning
2. Will preparation
3. Mandate in case of incapacity
4. Tax optimization according to your situation: establishing a trust, selling or transferring assets, planned giving, etc.

Our will preparation assistance service and our team of experts can help you with these essential steps.

Retirement Experience
Beyond taxation, master this new stage of your life by participating in customized conferences organized each year by Professionals’ Financial. Register for our Retirement Experience Weekend, a series of dynamic workshops that deal with the realities of professionals and that focus on different aspects of retirement (psychological, social, taxation, investment, insurance, etc.).

Different stage, different strategies
Whether you’re starting your career, in mid-life or in your later years, there’s a strategy for each stage of life tailored to your situation, to optimize the decumulation of your assets or to maximize your investments. Take full advantage!